Investigation of Rolls-Royce’s Execs is Priority for SFO

David Green, Director of the Serious Fraud Office, in undated photo at his offices.
Photo:
SFO

As he prepares to leave his post in April 2018, the Serious Fraud Office’s Director David Green is looking to bring closure to some of the agency’s main investigations. Deciding whether to charge individuals in the Rolls-Royce PLC’s bribery and corruption case is one of them, said Mr. Green.

“I hope we will have had significant progress through some of our main investigations [by the time I leave],” Mr. Green said Monday, speaking at the American Bar Association's Annual London White Collar Crime Institute. “In Rolls-Royce’s case, we had a [deferred prosecution agreement] in relation to the company, but that doesn’t mean the individuals are off-the-hook.”

The U.K.-based maker of jet and marine engines, which is no longer affiliated with the luxury car maker, reached a settlement with U.K., U.S. and Brazilian authorities in January that included an agreement to pay more than $800 million to resolve allegations it had paid bribes to win business across the globe.

The investigation, which Mr. Green said involved the review of over 30 million documents, spanned nearly three decades, involved a dozen countries and uncovered an alleged failure of the company's former leadership to alert authorities sooner.

A Rolls-Royce spokesman said the company has committed “to full ongoing co-operation” with investigations.

The SFO, a special agency with investigative and prosecutorial powers, is also conducting major investigations into Barclays PLC’s capital raising deal with Qatar Holding LLC from 2008, and the rigging of the London Interbank Offered Rate. Mr. Green included both in the short list of cases he wishes to have advanced in the next six months.

In a statement responding to the charges, Barclays said that it is considering its position in relation to the investigation. It also said that the SFO has yet to decide whether to bring charges against Barclays Bank,

Prosecutors Focus on Individuals

The prosecution of individuals in corporate corruption cases has gained traction in recent years, on the back of public outcry over a perceived willingness of regulators to accept large settlements from companies without identifying the people responsible for the misconduct.

Speaking at the ABA event, top officers from prosecuting agencies from the U.S. and the U.K. stressed that the criminal prosecution of individuals in corporate corruption cases remains a priority for regulators, even if the approach to securing convictions of individuals can be tortuous and the numbers of convictions relatively small.

Trevor McFadden, deputy assistant attorney general of the U.S. Department of Justice’s Criminal Division, said that the department was focused on holding individuals accountable. There were a record number of individuals charged under the Foreign Corrupt Practices Act in 2016, he said, at 24. This year so far, another seven individuals have been prosecuted.

Mr. McFadden, who is in the fraud section, highlighted the DOJ’s ongoing focus on health-care fraud against federal programs. More than 3,000 individuals have been charged in the past decade, and just last month, two former executives linked to hospital operators Tenet Healthcare were indicted on fraud charges. This follows the settlement with the company last year, under which Tenet agreed to pay more than $513 million.

The process of bringing corporate chiefs to justice over corruption and bribery is fraught, though. Aware of the regulator’s hunger for a few heads to roll, many companies may be tempted to “throw some people under the bus,” noted some white collar attorneys.

“A company makes a decision [to disclose misconduct] based on commercial realities,” said Mr. Green, referring to a financial penalty under DPAs. “I know that if I were defending [individuals], I’d be sensitive to that [risk].”

In the U.S., a company can get a DPA without judicial approval but any individual charged will face trial. “We have to be 100% sure that we have evidence beyond reasonable doubt…and will not take the company’s word that [so-and-so] did [the misconduct],” said Mr. McFadden. “I recognize there are shades of grey.”

“We are very interested in holding individuals accountable but we also have to have a solid case--we won’t just skip to indictment,” he said of the DOJ’s process.

At the U.K.’s Financial Conduct Authority, the investigation of firms and individuals go hand-in-hand, said Bill Sillett, head of retail enforcement at the FCA, speaking at a panel at the ABA event.

“Our initial intent is to bring action at the same time,” he said. “We do worry about scapegoating [by corporations] in an effort to show cooperation.”

The focus on individuals brings compliance programs to the spotlight, said Kara Bombach, shareholder at law firm Greenberg Traurig in Washington D.C.

“To demonstrate we have a rogue employee…we have to pick apart the compliance program,” said Ms. Bombach. “Otherwise it’s a systemic problem.”

Write to Mara Lemos Stein at mara.lemos-stein@wsj.com. Follow her on Twitter at @LikelyMara